Wotif.com reported a first-half net profit of $27.5 million, a 5 per cent fall year on year. Citigroup says it is concerned about margin erosion, as the company’s operating costs have increased. The broker expects this trend to continue into the second half of the financial year.

“In order to defend its declining market share, albeit from a position of incumbency, we expect WTF to continue to increase its marketing and IT spend."

Citigroup has cut its forecast for net profit after tax for the full year by up to 10 per cent.

The broker forecasts earnings per share (EPS) of minus 3.5¢ in fiscal 2012-13 and 12.3¢ in 2013-14. Wotif.com achieved EPS of 14.3¢ in fiscal 2011-12.